$3.9bn Internet banking fraud busted

Four arrests so far

Common Topics

The International Chamber of Commerce (ICC) has today announced the successful closure of an online banking fraud worth an estimated $3.9 billion.

Victims were duped by bogus get-rich-quick schemes involving fake documents before the scam was exposed. The investigation lasted six months.

The fraud came to light when financial institutions alerted the ICC to offers of European banking guarantees, worth between $50 million and $400 million, at 'highly discounted' prices on at least 29 different Web sites

Web addresses gave the impression that the scam sites were run by Euroclear Bank, the international clearinghouse; or Bloomberg, the information services provider - whereas in reality they were part of a sophisticated operation by elements in organised crime. Examples of the domain names used include www.euroclear30.50megs.com and www.bloomberg.50megs.com.

Through the ICC's Commercial Crime Services (CCS) member network, the bank guarantees were confirmed to be fraudulent, and Euroclear Bank and Bloomberg were alerted to the intellectual property breaches. Financial instruments were written on doctored letter-headed paper so as they would appear to be drawn on the accounts of three different European banks.

On behalf of all parties concerned, CCS' Cybercrime Unit (CCU) approached the fraudster's Internet Service Provider (ISP), Utah-based 50megs.com, which complied with requests to shut down the offending sites.

"We were informed that advance fees of hundreds of thousands of dollars were paid for the issue of these fraudulent guarantees, and the Web sites were used to validate the documents," said Jon Merrett, Assistant Director of ICC's Cybercrime Unit.

In addition to being used to procure advance fees, said Merrett, the guarantees were to be used in bogus High Yield Investment Programs (HYIP) which promised high returns from low risk financial instrument trading. It's likely a spam marketing campaign was used to promote the fraud, a variation of a scheme used by organised crime and money launderers for years that has now been taken onto the Internet.

Merett said the affair highlighted the need for ISPs to identify those using its service and to carry out "due diligence" checks on their activities.

After the sites were closed down the matter was turned over to criminal investigators.

Four arrests have so far been made in San Francisco and Lugano in Switzerland and more may follow. ®